| Abstract | As part of the Banking Reform Programme to promote competition in the banking industry, the Hong Kong Monetary Authority (HKMA) undertakes to deregulate the remaining interest rate rules in two phases. Phase 1 of the deregulation, which is scheduled for July 2000, will remove the interest rate cap on time deposits with a maturity of less than 7 days and the prohibition on benefits for all deposits with the exception of Hong Kong dollar savings and current accounts. An analysis by the HKMA of the prevailing economic and financial conditions indicates that the environment is not unfavourable for this phase of the deregulation to take place. With the support of the Exchange Fund Advisory Committee, the Banking Advisory Committee and the Deposit-taking Companies Advisory Committee, the HKMA and the banking industry agree that Phase 1 of the deregulation should proceed on 3 July 2000. This article explains the considerations behind this decision. |
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